A $500 million addition to the Orange County Convention Center has some hotel owners looking to capitalize by adding rooms years before work on the massive venue is expected to finish.
At least 35 hotel expansion projects will begin this year or next, with the work expected to add nearly 7,000 rooms in Central Florida.
The onslaught of expansion would add to the 126,259 hotel rooms in Orlando, the second-largest market in the U.S. The numbers, which come from the data and analytics specialist STR, also indicate that 6,940 rooms are under construction.
The names on the hotel list include some of the more-recognized brands, including Holiday Inn, Residence Inn, Walt Disney World and Universal Studios.
Also driving the growth is the ever-expanding tourism industry that last year saw a record 72 million visitors come to the region.
Longtime hotelier Harris Rosen said he will expand his properties primarily because of the convention center’s plans.
Convention center officials announced the project last year, with an expectation that it would be complete by 2021. Paid for with the county’s tourism tax, it would add a 200,000-square-foot multipurpose venue and a 60,000-square-foot ballroom.
Officials also estimated that it could attract as many as 250,000 more people to the venue each year, adding to the 1.5 million people who went to the convention center during the past fiscal year.
“This ripple effect is beneficial to all of us in Central Florida,” Rosen said in a recent interview. “You hardly ever see a stop sign [in Orlando], and there is always a green light, but you have to be careful.”
Hotel occupancy rates in 2017 were at 79.2 percent, up from 75.5 in 2016. Through the end of May, that number is at 81.4 percent.
One factor driving the growth and optimism is the expanding economy.
That usually means more people attending conventions that support their industry, said Deborah Breiter Terry, a UCF professor who teaches convention and trade show management.
“When businesses come to these conventions, people will stay in the hotels, they will eat at the restaurants,” she said. “All tourism entities will stand to benefit from it.”
And investors anticipate a growing need for hotel rooms as a result, Visit Orlando President and CEO George Aguel said.
“Investors who make these decisions, they look at demand history and what is coming in the future,” he said. “They like to know what has happened historically.”
The theme park industry in Orlando no doubt drives a good portion of tourism’s growth as they continue to add new attractions. Walt Disney World recently debuted Toy Story Land and World of Avatar in Orlando. Universal Studios, meanwhile, recently opened a new Fast & Furious ride.
But with that comes a trickle-down effect that also helps other area attractions, Aguel said.
That also affects the hotel industry, as companies vie for a piece of the growing number of tourists and convention-goers.
“They bring people here who are not intending to come because some organizer chose this location,” Aguel said. “Every time someone stays here, they leave a lot of money behind.”
The growth has several companies lining up new projects.
Two examples: Hilton has a 259-room hotel expected to open by the end of next year near SeaWorld; and the 168-room Hyatt House opened on International Drive in June.
Rosen said he plans to add more than 1,000 rooms in the near future.
The company late last year acquired a Red Roof Inn — since renamed Midpointe Hotel — near the convention center, adding 134 rooms in the process. They then acquired the neighboring 222-room Clarion Inn & Suites.
The moves were a direct result of expected growth in convention center traffic, Rosen said. However, he said the days of expansion could be winding down because it’s already a crowded market.
“If you look at the growth in Orlando over the last 40 to 45 years, it’s been extraordinary,” he said. But “can we expand to the same degree? Of course not. We don’t have the land to do it. At some point in time, you reach a saturation point.”
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